UK Financial Regulator States There Is No Need to Regulate Digital Currencies

Due to the rising popularity and prices of digital currencies, governments are becoming more concerned about their future, and trying to develop regulatory framework meant to regulate cryptocurrencies, and limit their potential in being used for money laundering and other illegal activities.

While some countries choose to be strict, and therefore implement harsh regulation, others are more open-minded. Such is the example of the United Kingdom. Recent reports indicate that the chief of the UK’s financial regulator mentioned that he currently sees no systemic risks for bitcoin, therefore is not encouraging the government to develop digital currency regulations in his mandate.

However, Andrew Bailey, who is the head of the Financial Conduct Authority, did say that crypto investors should be thoroughly prepared to lose everything if they purchase bitcoin, and that the country cannot offer protection for these financial instruments.

Regardless of this, as long as people understand the risks associated with bitcoin, which Bailey refers to as a volatile commodity, no legislative pressure will be made to obtain an FCA regulation. It is important to keep in mind that the FCA is not free to begin overseeing and regulating any form of market, without prior approval and relevant legislation from the British Parliament or Brussels.

In this press statement, Bailey mentioned that: “I don’t think bitcoin is prevalent enough at the moment to be a systemic threat in the way we experienced during the financial crisis other threats; it needs watching carefully but I don’t think we’re there yet.” Additionally, he went ahead and rejected the idea that bitcoin is a currency, and rather referred to it as a commodity, which is understandable from certain points of view.

On the other side of the spectrum, the main federal regulator in the United States mentioned that they’ll be a bit more vigilant when assessing the risks associated with digital currencies. Additionally, the regulator also mentioned that the impact digital currencies are having on the economy and its stability remain limited, therefore there is no need for additional regulation at this moment in time.

Based on everything that has been outlined so far, it is interesting to see how opinions vary from country to country. However, given the continuous increase in popularity for bitcoin and other cryptocurrencies, it isn’t a surprise that various forms of regulation are being considered.